TIDMWPM
RNS Number : 4908T
Wheaton Precious Metals Corp.
25 March 2021
March 25, 2021 TSX | NYSE | LSE: WPM
Vancouver, British Columbia
WHEATON PRECIOUS METALS announces acquisition of gold stream
from capstone's santO domingo project
Wheaton Precious Metals(TM) Corp. ("Wheaton" or the "Company")
is pleased to announce that its wholly-owned subsidiary, Wheaton
Precious Metals International Ltd. ("Wheaton International"), has
entered into a definitive Precious Metal Purchase Agreement (the
"Agreement") with Capstone Mining Corp. ("Capstone") (TSX: CS) in
respect to the Santo Domingo project located in the Atacama Region,
Chile. Upon closing, Wheaton International will purchase 100% of
the payable gold production until 285 thousand ounces ("koz") have
been delivered, thereafter dropping to 67% of payable gold
production for the life of the mine. Wheaton International will pay
Capstone a total upfront cash consideration of US$290 million (the
"Upfront Payment"), $30 million of which is payable upon closing
and the remainder of which is payable during construction of the
Santo Domingo project, subject to customary conditions being
satisfied, including Capstone attaining sufficient financing to
cover total expected capital expenditures. In addition, Wheaton
will make ongoing payments for gold ounces delivered (the
"Production Payment") equal to 18% of the spot gold price [1] .
"Santo Domingo is an exceptional project that provides Wheaton
with an additional near-term growth opportunity. The project is
forecast to be a first-quartile copper producer with a long mine
life, making it an ideal fit for Wheaton's existing high-quality
portfolio," said Randy Smallwood, Wheaton's President and Chief
Executive Officer. "We are very excited to further build our
partnership with Capstone and look forward to seeing Santo Domingo
developed into a top-tier copper mine."
TRANSACTION HIGHLIGHTS
-- The Santo Domingo project is forecast to be a first quartile
copper mine ([2]) with an 18 year mine life ([3]) .
-- Attributable gold production is forecast to average 35 to 40
koz per year for the first five full years of production and 25 to
30 koz for the first ten full years(3) .
-- Capstone expects major construction to commence in late 2021
with the first full year of production forecast for 2024.
-- Subsequent to the closing of this acquisition, the addition
of the Santo Domingo project will increase Wheaton's estimated
Proven and Probable gold reserves by 0.51 Moz, Measured and
Indicated gold resources by 0.12 Moz and Inferred gold resources by
0.03 Moz. ([4])
-- Exploration upside potential exists as no exploration
drilling has been completed since Capstone acquired the Santo
Domingo project in 2011.
-- Provides Capstone with an early deposit of $30 million, which
will be used to repay the funds paid by Capstone to acquire the
remaining 30% of the Santo Domingo project.
TRANSACTION TERMS
-- Wheaton International will be entitled to receive 100% of the
payable gold production until 285 koz have been delivered,
thereafter dropping to 67% of payable gold production for the life
of the mine.
-- Wheaton International will pay Capstone the Upfront Payment
of US$290 million as follows:
o once certain conditions have been met, Wheaton International
will advance US$30 million to Capstone; and
o the remainder of the Upfront Payment will be paid on a pro
rata basis during construction ( estimated to be approximately two
to three years) , subject to customary conditions being satisfied,
including Capstone attaining sufficient financing to complete
construction.
-- Wheaton International will make ongoing payments for gold
ounces delivered equal to 18% of the spot gold price until the
value of gold delivered less the cumulative Production Payments is
equal to the upfront consideration of US$290 million, at which
point the Production Payment will increase to 22% of the spot gold
price.
-- Gold deliveries are guaranteed by Capstone and by the Santo
Domingo project owner. Security over the assets of the Santo
Domingo project has also been provided by the Santo Domingo project
owner.
-- Closing of the transaction is expected to occur shortly
following announcement and is subject to the completion of certain
corporate matters and customary conditions.
FINANCING THE TRANSACTION
The early deposit portion of the Upfront Payment will be made on
closing, with the balance of the Upfront Payment to be paid over
the construction of the Santo Domingo project. At December 31,
2020, the Company had approximately US$193 million of cash on hand
and approximately US$1.8 billion of remaining capacity under the
Company's US$2 billion revolving credit facility. With operating
cash flow in 2020 of approximately US$765 million, the Company has
ample capacity to service any additional debt resulting from this
transaction, especially given the low interest rate and flexible
nature of the covenants under the Company's revolving credit
facility.
ABOUT CAPSTONE AND THE SANTO DOMINGO PROJECT
Capstone is a Canadian base metals mining company, focused on
copper with two producing mines, the Cozamin copper-silver mine in
Zacatecas State, Mexico and the Pinto Valley copper mine located in
Arizona, US. In addition, Capstone owns the Santo Domingo project,
a large scale, fully-permitted, copper-iron-gold project in Region
III, Chile, as well as a portfolio of exploration properties.
Capstone's strategy is to focus on the optimization of operations
and assets in politically stable, mining friendly regions, centered
in the Americas.
Santo Domingo is a first quartile copper-iron-gold project(2)
and Chile's only fully-permitted greenfield project. The proposed
open-pit mine is located 50 kilometres southwest of Codelco's El
Salvador copper mine and 130 kilometres north-northeast of CopiapĆ³,
near the town of Diego de Almagro in Region III, Chile. Elevation
at the site ranges from 1,000 to 1,280 metres above sea level, with
relatively gentle topographic relief.
Attributable Mineral Reserves and Mineral Resources - Santo
Domingo, effective as of April 30, 2020
Category Tonnage Grade Contained
-----------
Mt Au g/t Au Moz
----------- -------- ------- ----------
Proven 65.4 0.08 0.17
Probable 326.9 0.03 0.34
----------- -------- ------- ----------
P&P 392.3 0.04 0.51
----------- -------- ------- ----------
Measured 1.4 0.05 0.002
Indicated 120.1 0.03 0.11
----------- -------- ------- ----------
M&I 121.5 0.03 0.12
----------- -------- ------- ----------
Inferred 31.8 0.02 0.03
Notes on Mineral Reserves & Mineral Resources :
1. All Mineral Reserves and Mineral Resources have been
estimated in accordance with the 2014 Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Standards for Mineral Resources and
Mineral Reserves and National Instrument 43-101 - Standards for
Disclosure for Mineral Projects ("NI 43-101").
2. Mineral Reserves and Mineral Resources are reported above in
millions of metric tonnes ("Mt"), grams per metric tonne ("g/t")
and millions of ounces ("Moz").
3. Qualified persons ("QPs"), as defined by the NI 43-101, for
the technical information contained in this document (including the
Mineral Reserve and Mineral Resource estimates) are:
a. Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); and
b. Ryan Ulansky, M.A.Sc., P.Eng. (Senior Director, Engineering),
both employees of the Company (the "Company's QPs").
4. The Mineral Resources reported in the above tables are
exclusive of Mineral Reserves. Capstone report Mineral Resources
inclusive of Mineral Reserves. The Company's QPs have made the
exclusive Mineral Resource estimates for the mine based on average
mine recoveries and dilution.
5. Mineral Resources, which are not Mineral Reserves, do not
have demonstrated economic viability.
6. Santo Domingo project Mineral Reserves are reported as of
November 14, 2018 and Mineral Resources as of February 13,
2020.
7. Santo Domingo project Mineral Reserves are reported above
variable throughput rates and cut-offs assuming $3.00 per pound
copper,$1,290 per ounce gold and $100 per tonne iron.
8. Santo Domingo project Mineral Resources are reported above a
copper equivalent cut-off of 0.125% assuming $3.50 per pound
copper, $1,300 per ounce gold and $99 per tonne iron.
9. The Santo Domingo gold purchase agreement provides that
Capstone will deliver 100% of the gold production until 285,000
ounces are delivered and 67% thereafter for the life of the mine.
Attributable reserves and resources have been calculated on the
100% / 67% basis.
Neil Burns, P.Geo., Vice President, Technical Services for
Wheaton Precious Metals and Ryan Ulansky, P.Eng., Vice President,
Engineering, are a "qualified person" as such term is defined under
National Instrument 43-101, and have reviewed and approved the
technical information disclosed in this news release (specifically
Mr. Burns has reviewed mineral resource estimates and Mr. Ulansky
has reviewed the mineral reserve estimates).
For further information, please contact:
Patrick Drouin or Emma Murray
Investor Relations
Wheaton Precious Metals Corp.
Tel: 1-844-288-9878
Email: info@wheatonpm.com
Website: www.wheatonpm.com
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
This press release contains "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation concerning
the business, operations and financial performance of Wheaton and,
in some instances, the business, mining operations and performance
of Wheaton's precious metals purchase agreement (" PMPA")
counterparties. Forward-looking statements, which are all
statements other than statements of historical fact, include, but
are not limited to, payment by Wheaton International of US$290
million to Capstone and the satisfaction of each party's
obligations in accordance with the Agreement , the receipt by
Wheaton International of gold production in respect of the Santo
Domingo project, the future price of commodities, the estimation of
future production from mineral stream interests owned by Wheaton
(the "Mining Operations") (including in the estimation of
production, mill throughput, grades, recoveries and exploration
potential), the estimation of mineral reserves and mineral
resources (including the estimation of reserve conversion rates)
and the realization of such estimations and the commencement,
timing and achievement of construction, expansion or improvement
projects by Wheaton's PMPA counterparties at Mining Operations.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "projects", "intends", "anticipates" or
"does not anticipate", or "believes", "potential", or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of Wheaton to be materially different from those
expressed or implied by such forward-looking statements, including
but not limited to risks associated with any specific risks
relating to the satisfaction of each party's obligations in
accordance with the terms of the Agreement , fluctuations in the
price of commodities (including Wheaton's ability to sell its
precious metals or cobalt production at acceptable prices or at
all), the Mining Operations (including fluctuations in the price of
the primary or other commodities mined at such operations,
regulatory, political and other risks of the jurisdictions in which
the Mining Operations are located, actual results of mining, risks
associated with the exploration, development, operating, expansion
and improvement of the Mining Operations, environmental and
economic risks of the Mining Operations, and changes in project
parameters as plans continue to be refined), and other risks
discussed in the section entitled "Description of the Business -
Risk Factors" in Wheaton's Annual Information Form available on
SEDAR at www.sedar.com , and in Wheaton's Form 40-F for the year
ended December 31, 2019 and Form 6-K filed March 11, 2020 both
available on EDGAR at www.sec.gov , as well as the risks set out in
Wheaton's management's discussions and analysis for the period
ended December 31, 2020 available on SEDAR and EDGAR (together, the
"Disclosure"). Forward-looking statements are based on assumptions
management currently believes to be reasonable, including (without
limitation): the payment of US$290 million to Capstone and the
satisfaction of each party's obligations in accordance with the
terms of the Agreement , that there will be no material adverse
change in the market price of commodities, that the Mining
Operations will continue to operate and the mining projects will be
completed in accordance with public statements and achieve their
stated production estimates, that the mineral reserve and mineral
resource estimates from Mining Operations (including reserve
conversion rates) are accurate, and such other assumptions and
factors as set out in the Disclosure. There can be no assurance
that forward-looking statements will prove to be accurate and even
if events or results described in the forward-looking statements
are realized or substantially realized, there can be no assurance
that they will have the expected consequences to, or effects on,
Wheaton. Readers should not place undue reliance on forward-looking
statements and are cautioned that actual outcomes may vary. The
forward-looking statements included herein are for the purpose of
providing readers with information to assist them in understanding
Wheaton's expected financial and operational performance and may
not be appropriate for other purposes. Any forward looking
statement speaks only as of the date on which it is made, reflects
Wheaton's management's current beliefs based on current information
and will not be updated except in accordance with applicable
securities laws. Although Wheaton has attempted to identify
important factors that could cause actual results, level of
activity, performance or achievements to differ materially from
those contained in forward--looking statements, there may be other
factors that cause results, level of activity, performance or
achievements not to be as anticipated, estimated or intended.
[1] ) Wheaton will make ongoing payments for gold ounces
delivered equal to 18% of the spot gold price until the value of
gold delivered less the Production Payment is equal to the upfront
consideration of $290 million, at which point the Production
Payment will increase to 22% of the spot gold price.
[2] ) Wood Mackenzie Ltd. Data set 2020 Q3.
[3] ) Production estimates based upon the report titled "Santo
Domingo Project, Region III, Chile, NI 43-101 Technical Report"
prepared for Capstone Mining and dated February 19, 2020.
Production forecasts contain forward looking information and
readers are cautioned that actual outcomes may vary. Please see
"Cautionary Note Regarding Forward Looking-Statements" at the end
of this news release for material risks, assumptions, and important
disclosure associated with this information.
[4] ) Please refer to the Attributable Mineral Reserves &
Mineral Resources table in this news release for full disclosure of
reserves and resources associated with the Santo Domingo project
including accompanying footnotes.
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